Q. What can you deduct if you are a resident of another state who owns a second home in New Jersey? We prepaid our 2018 property taxes in 2017. How does this affect our federal and state of Maryland 2017 returns?
A. Maryland piggybacks the Internal Revenue Code.
Here’s how that works.
The state takes total federal itemized deductions from Schedule A and has the taxpayer back out state and local income taxes included therein, said Neil Becourtney, a certified public accountant and tax partner with CohnReznick in Eatontown.
“If the taxes that were prepaid were billed — i.e. the February and May 2018 New Jersey tax payments — then those prepaid taxes are allowable deductions for 2017 for both federal and Maryland purposes,” Becourtney said. “If you prepaid real estate taxes that had not yet been billed, said prepayments are not deductible.”
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